The capital investment stream has long dried up for many technology providers. But a handful of automated solutions providers serving the insurance industry continue to exhibit the mettle to attract financiers. Two companies-Quincy, Mass.-based Worldinsure Ltd., which develops technology for the life insurance market, and Charlotte, N.C.-based Access CoverageCorp., a provider of online coverage for small-businesses-revealed in April they had secured fresh capital.With the funding coming via a cross-section of e-commerce, technology and financial service providers, Worldinsure raised second-round financing totaling $31 million. The financing will support the development and international expansion of processing solutions for medically underwritten insurance products, says John Hele, president and CEO of Worldinsure.
Access CoverageCorp, meanwhile, raised $8 million in second-round funding. The capitalization was led by New York City-based Capital Z Partners, a global asset management firm. Joining Capital Z are Hartford, Conn.-based The Hartford Financial Services Group Inc. and Branchville, N.J.-based Selective Insurance Co. Terms of the transaction were not disclosed.
The well is dry
Until recently, many financiers were likely to invest first and ask questions later. Today, most are reining in their pocketbooks and becoming more selective.
"It's not a fun time to try to raise capital. It's a gut check for most all technology companies to take a hard look at their business model and see if it has staying power," CoverageCorp co-founder Fred Waite says. "A year ago at this time, funding was easy to come by."
Both Worldinsure and Coverage-Corp appear to have one common trait that appeals to investors: They've cultivated a technology that helps streamline underwriting for carriers and agents in a Web-based environment-in turn, taking manual processing costs out of the operation.
Moreover, CoverageCorp's technology platform "enables business owners to easily secure protection for their companies," says Joseph Gauches, executive vice president of e-business and technology solutions at The Hartford.
But even with the infusion of fresh capital, technology firms such as Worldinsure must continually tweak their operations to ensure that investors come calling, says Todd Eyler, senior analyst with Cambridge, Mass.-based Forrester Research Inc.
"Worldinsure has a great operating model, but the one negative I've identified is that they need to find a way to take the complexity out of life insurance products online," he says.
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