Metromile - 2020H1

  • Founded in 2011 and based in California, USA, Metromile is a provider of a pay-per-mile car insurance platform that empowers drivers by creating a more connected and informed car ownership experience. The company’s platform offers affordable car insurance, transparent pricing based on the miles driven, data to optimize driving behavior, AI-driven claims service, and instant access to detailed vehicle diagnostics via an on-board diagnostic device, Metromile Pulse, and in-house AI platform, Ava AI.

Company Overview

Founded 2011
Sectors Insurance Technology, Internet-of-Things
Address San Francisco, CA, U.S.A

Management Team

Dan Preston Co-Founder & CEO
Jeff Briglia COO
Carrie Dolan CFO
Paw Andersen CTO
Sunil Rajaraman CMO
Jason Altieri General Counsel

Board of Directors

David Friedberg Co-Founder and Chairman
Colin Bryant New Enterprise Associates
Krishna Kolluri New Enterprise Associates
Karim Hirji Intact Ventures
Neil Rimer Index Ventures

Recent Corporate Developments

  • March 11, 2020: Metromile’s report shows that customers are driving less in its major locations, Seattle and San Francisco, with an average of 6% drop everyday during the rise of the COVID-19 pandemic. Following this drop in miles driven, the Company launched a broad marketing campaign encouraging drivers to switch to Metromile to capture savings. According to CEO, Dan Preston, the global pandemic and general recession, Metromile will become an increasingly attractive option for drivers.
  • April 6, 2020: Metromile furloughed and parts ways with one-third of its staff, approximately 100 employees. The lay-offs were attributed to the “economic uncertainties as a result of Covid-19”. Further in the Company’s message, the CEO notes, “From Metromile’s earliest days, we’ve focused on strong unit economics, disciplined financial stewardship, and a deliberate approach to growth. This focus provides us with an exceptionally solid foundation, but the unprecedented environment brought on by Covid-19 requires us to take measures that protect the business and our customers, while creating runway to ensure a full recovery. We believe these steps will enable us to support our customers and the remaining team fully and help us emerge in a position of enduring strength.”
  • April 27, 2020: Forbes exclusive article on pay-per-mile insurance features Metromile. In a survey, Forbes finds that the total number of miles driven have been cut by half since mid March. Car insurance customers of traditional insurers are having to apply for refunds or wait for discounts. CEO of Metromile, Dan Preston noted that “customers didn’t need to wait for a discount or ask for a refund with pay-per-mile insurance plan because rate adjustments are automatic every month.”

Recent Transaction Range

  • No recent transaction activity.

Public Comparables

($ in millions USD, except per share prices)

Source: SEC.gov, Yahoo Finance

Private Comparables

($ in millions USD)

Business Overview

The automobile industry in the US is a highly saturated industry that is occupied by a few large-scale enterprises that command a majority of the market share. The development and operations of these companies have largely been dependent on (1) the performance of their large size sales & insurance agent teams (2) marketing and promotional strategy (3) open market mergers & acquisitions with regional players (4) investment returns from asset management strategies.

Metromile is a new type of insurance company looking to revolutionize the way auto-insurance companies do business and engage with customers. By developing its own proprietary software and hardware technology platform, Metromile forgoes the typical operating costs that traditional insurance companies experience, while providing an insurance solution that is more economically efficient and viable for its target customer.

Metromile’s Pay-per-Mile Insurance

Metromile’s auto-insurance product calculates monthly premiums utilizing a new methodology that helps its customer generate significant savings. That is, the Company charges its customers a low daily base rate, plus a per-mile fixed rate. As such, customers who drive less end up paying less on a month-to-month basis.

Based on the Company’s analysis, drivers can generate significant savings by switching to Metromile’s coverage.

As a result, Metromile’s insurance product targets a niche of customers that have (1) do not drive as frequently (2) have shorter commuting distances.

Technology Platform

(1)Tracking and Diagnosis

Integral to the pay-per-mile insurance model is Metromile’s ability to track its customers’ actual mileage. To accomplish this, the Company offers Metromile Pulse, an on-board diagnostic device that is used to enable tracking of an automobile’s physical condition, travel / mileage data, and driver behavior.

Metromile Pulse uses telematics technology, which connects to a cellular network to transfer data collected from customer cars into Metromile’s smart driving mobile application. For the Company’s end, the Pulse can allow the continuous tracking of driver mileage and even receive data on incidental breaking, acceleration, and collision.

For the customers, the continuous stream of data to their Metromile mobile application allows them to keep track of miles driven, budget accordingly, review driving tendencies, and receive advice on how to reduce on-road risk.

Tracking and Diagnosis

Automated Claims Service by AVA

(2)Filing Claims and Artificial Intelligence

Metromile has also revolutionized the antiquated model of filing and processing insurance claims. That is, the Metromile mobile is capable of recognizing timing, location, and degree of damage for a vehicle during a collision. By combining Metromile Pulse’s sensor and diagnostic capabilities and Metromile’s proprietary Artificial Intelligence platform, AVA, the Company is able to automate many procedures within the insurance claims process.

AVA can accurately verify claims in seconds and quickly resolve them. It will guide customers through a claims filing process by suggesting areas of the damaged vehicle where pictures should be taken and asking all the typical questions an on-site claims agent would ask after a collision. After the claim has been formally submitted with the guidance of AVA, the insurance platform will match the data collected via AVA to data collected by Metromile Pulse at the time of the incident. Through this comparison, Metromile’s claims verification team is able to accurately determine the truthfulness of the claim and automatically process the payment of a verified claim, greatly improving the efficiency and duration between accident and claim payment. Not only does this improve customer experience, it lowers the Company’s operating costs by eliminating the need for as many on-site claims adjusters and decreases the probability of insurance fraud(1).

Furthermore, Metromile connects AVA to a vast network of collision repair shops and car rental companies that are close to the customer or their location of collision. After an accident, AVA can also help schedule repairs, car rentals, and collision site towing, further providing care to the customer that is not traditionally available with other auto-insurance providers.

(1) Metromile has trained its AVA Artificial Intelligence system to recognize collisions through numerous real-time crashes that are measured by Metromile Pulse.

Customers

Metromile targets customers who drive less than 10,000 miles per year – customers in cities with stronger public transportation systems and infrequent drivers in suburban areas. Currently, Metromile is available in 8 states, including Arizona, California, Illinois, New Jersey, Oregon, Pennsylvania, Virginia, and Washington.

Revenue Model

Metromile’s revenue is made up on two main components:
(1)Insurance premiums collected on a monthly basis from its customers
(2)Investment income that the company receives from allocating premium-derived capital into longer term, higher grade, fixed income investments.
(3)Other revenues that may be derived from business collaborations, technology partnerships, and licensing deals.

Financing History

Since inception, the Company has raised approximately $285.48 million USD across 5 rounds:

RoundAmount($ M)Post money valuation($ M)Lead Investors
2012-12 Series A$4.29$12.0New Enterprise Associates, Index Ventures
2013-04 Series B$10.0$45.0Felicis Ventures
2014-12 Series C$40.2$158.4Mitsui & Co
2016-09 Series D$141.0$335.0New Enterprise Associates, Intact Ventures
2018-08 Series E$90.0$540.2Intact Ventures, Tokio Marine Holdings
2021-01 Pre-IPO$450.0/Uber Veteran Ryan Graves, INSU Acquisition Corp. II
2021-02 SPAC Merger$400.0$1,300.0INSU Acquisition Corp. II.

Source: SharesPost, Crunchbase

Market Overview

According to Acumen Research, the Global Usage-based Insurance (UBI) Market is currently worth $28.33 billion USD. In the next 8 years leading up to 2026, the market will continue to grow at a CAGR of 26%, resulting in a total market size of $180 billion USD.

Factors contributing to the growth of the UBI market include

(a)penetration of smartphones with ability to connect to onboard devices

(b)Scaling and broadening of Internet-of-Things infrastructure that would further enable data collection and interconnectivity between a given vehicle and their surrounding environments

(c)Decrease of driven miles within metropolitan areas and continual improvement / selection of alternative or public transportation methods

(d)Increased demand from consumers for a customized, more consumer-centric solution to traditional insurance products

It is also estimated by Acumen Research that in 2017, the “pay how you drive” segment held a dominant 70% share of the entire UBI market. Key drivers of continued growth in this segment will depend on the rapid adoption of UBI technologies for commercial fleet management and maintenance.

Competitors

Root Insurance

2015 – United States

Root Insurance currently provides car insurance to drivers in 29 US states. The company requires drivers to download the Root mobile application and perform a test drive for several weeks, while the application monitors and measures driving behavior in the background. Through this methodology of risk assessment, the application then quotes the driver a monthly premium which is based on the driving score assigned as a result of the test drive.

Root currently offers its insurance product to residents in 29 states and plans to expand its insurance offering to the rest of the United States in the coming years.

It is important to note that Root does not utilize any onboard diagnostic device and does not calculate its users’ miles-driven, but focuses on driving behavior instead.

Recent News

  • June 3, 2020: Root launches homeowners insurance on its platform.
  • June 29, 2020: Root and GasBuddy partner to deliver safe driving insights on the GasBuddy app.

Progressive

1937 – United States

The Progressive Corporation is an American insurance company and one of the largest providers of car insurance in America. The Company’s usage-based insurance option is called Snapshot. After signing up for the Snapshot product, customers will receive an onboard-diagnostic device that will help Progressive measure miles driven, time of day, hard-braking incidents or hard-cornering incidents.

Once Progressive evaluates the collected data of a 30-day driving period, customers will either qualify for a discount or have to remain at the previous premium level that was charged. The on-board diagnostic device would then be mailed back to Progressive as it is not an integrated part of Progressive’s insurance services.

Recent News

  • July 22, 2020: Progressive announces Snapshot Road Test(SM), a new mobile app option to complement Snapshot Test Drive. The new experience will be accessed through Progressive’s current Snapshot mobile app and allows users to get rewarded for their safe driving habits in the form of discounted rates when they receive a quote with Progressive.

Allstate Insurance

1931 – United States

Allstate is an American insurance company that is currently one of the largest American corporations with revenues of $39.8 billion and ranked 79th on the Fortune 500 list.

Allstate’s Drivewise program offers discounts of up to 30 percent to auto insurance customer who live in Colorado, Michigan, New Jersey, New York, Arizona, Illinois and Ohio. The program also uses a telematics onboard diagnostics device to track speed, mileage, hard-braking and other driving habits. The data collection period for Allstate would take at least 90 days and the max discount that can be gained is 30% off of the insured customer’s previous premium rate.

Recent News

  • No recent developments.