Insurance broker Brown & Brown has acquired CoverHound, a digital property/casualty insurance marketplace, and CyberPolicy, CoverHound’s small business subsidiary.
Neither side disclosed financial details of the asset transaction.
After the deal closes, CoverHound and CyberPolicy will continue to operate independently under Florida-based Brown & Brown and focus on scaling digital partnerships with trusted brands.
Brown & Brown said the acquisition helps it gain access to the digital insurance market for individuals and small businesses.
“By combining CoverHound with our expertise and market strength, we will be able to meet more customers where they are and provide them with the appropriate coverage for their unique exposures,” said Steve Boyd, Brown & Brown senior vice president of Technology, Innovation and Digital Strategy, said of the acquisition.
California-based CoverHound launched in early 2010 and raised more than $112 million in venture capital over the last decade, including a $58 million funding round in 2019 with lead investor Hiscox and other investors including Chubb, Aflac Ventures, and MS&AD in Japan.
In 2015, Chubb (then ACE) took a 24% stake in CoverHound. However, with this deal, Brown & Brown will assume 100% ownership.
CoverHound offers personal lines and small business policies from Chubb, Hiscox, Progressive, Liberty Mutual, biBERK, Safeco, Nationwide, Mercury, Hartford Steam Boiler, MetroMile and others. Launched in 2016, CyberPolicy helps small businesses with up to $250 million in revenue compare and buy cyber insurance online. Both operate in all 50 states.
Over the past 10 years, CoverHound and CyberPolicy have maintained a leading Net Promoter Score of 82, have significantly increased the number of policies sold entirely online and have developed the capability to digitally quote and bind multiple carriers and products into a single online transaction, the deal announcement noted.
Brown & Brown, one of the largest insurance brokers in the country, reported 2019 revenues of $2.4 billion. It has for years been among the most active buyers of insurance agencies and has grown by acquiring more than 500 agencies. During the second quarter alone, Brown & Brown completed three acquisitions with annual revenues of approximately $46 million.
CoverHound CEO Keith Moore called Brown & Brown an “exceptional company with an entrepreneurial spirit” that has strong carrier relationships. “The acquisition strengthens what has always been our mission: delivering fast, accurate and actionable options online to customers based on their specific insurance needs, anytime, anywhere,” Moore said.
CoverHound/CyberPolicy’s planned acquisition follows a number of others in the digital space in recent months. Last November, Aon acquired CoverWallet, which began as a digital insurance agent. Since then, insurtechs including Buckle, Hippo and Bold Penguin have themselves made acquisitions.
Some experts say that the cycle of insurtech startups that began several years ago is reaching a point where they must decide whether to pursue a merger, acquisition or partnership in order to keep growing and remain stable.
“Insurtech is reaching a point where [startups] must decide whether they are better off on their own or need to find a partner,” Adrian Jones, SCOR’s deputy CEO of P&C Partners in charge of ventures and strategic partnerships, told last month’s Insuretech Connect global conference. He said that startups reach a point here they pursue growth that builds on, and adds to the capabilities they started with.
A recent report by Deloitte concluded that the current pandemic and economic downturn could spur more insurtech deals. “Insurtechs may have a greater willingness to partner or be acquired due to the uncertain economic outlook, and carriers seeking to quickly respond to a rapidly changing world (such as an increased need for virtual or touchless claims) may find insurtech investment a more appealing allocation of capital than investing in the current low-interest-rate environment,” the Deloitte report said.
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