Investing in Ladder, the First Digital Life Insurance Company
There are a few times in an investor’s life when you experience a once-in-a-generation opportunity. We believe that this type of opportunity exists in the life insurance industry. That’s why we are excited to announce our investment in the first fully-digital life insurance company, Ladder. Thomvest Ventures has led a $100mm Series D financing in the company together with OMERS Growth Equity.
When we began researching how the insurance industry might enter the digital era, we were struck by the lack of consumer-direct life insurance brands akin to what GEICO or Progressive have built in the auto industry. As we interviewed incumbents in the life insurance industry, we were struck by the conventional wisdom that “life insurance is sold, not bought.” As consumers increasingly shift their purchase behaviors online, however, it feels like this adage is beginning to show its age. In much the same way that the travel industry has moved online over the last two decades, we believe that the life insurance industry is undergoing a similar transformation. At the end of this transformation, we expect to see Ladder as one of the leading household names in life insurance.
To put this digital transformation into perspective, the 2020 Insurance Barometer Study found that 29% of U.S. consumers they surveyed would prefer to buy their life insurance online, a trend that has been growing steadily. And yet, less than 10% of policies researched online are purchased online. Ladder is enabling this process to happen for consumers in a way that others have not. Consumers can bind policies in a mobile app in five minutes versus an industry average that is closer to six weeks. An astounding 74% of Ladder applicants have applied for life insurance via their mobile app.
With Ladder, we also see evidence for where the industry is headed. Ladder embeds their insurance offering via an API within customer journeys that are intuitive and convenient for consumers. There are natural moments in our lives when life insurance becomes a consideration. For most of us, this would be when we take on significant household debt (such as a mortgage) or significant responsibilities (such as having kids). Embedding life insurance into the mortgage experience, or into sites or applications that cater to the needs of young families, is a natural point of synergy. Ladder already embeds its insurance via a number of leading financial services firms. It is via such partnerships that we see a shift taking place from selling life insurance the “traditional” way to responding to the intentions of consumers at points in time that make sense to them.
The result of creating the first digital life insurance company has been that rare combination of impressive revenue growth (up 4.5x over last year) and extremely high customer satisfaction scores (NPS of 82). Moving the elements of running a life insurance business — from customer acquisition to product, underwriting, and policy administration — onto a fully-integrated digital platform has another tremendous benefit. It enables Ladder to pass the cost savings gained via automation back to consumers in the form of lower-cost life insurance policies. The result is an expansion of the market: 76% of Ladder’s customers are first-time buyers.
We believe that Ladder has the same potential to define and lead their market in the same way that we saw in past investments such as LendingClub (NYSE:LC), SoFi (NASDAQ: SOFI), and Kabbage (acquired last year by American Express). We’re excited to continue this journey with the Ladder team and look forward to working together to realize this once-in-a-generation opportunity.
