Dallas—Melbourne O’Banion, co-founder and CEO of Bestow, sees opportunity in using analytics to bring the insurance industry into the 21st century.
To that end, the Dallas-based startup announced today it’s raised $15 million in a Series A funding round led by Valar Ventures, with participation from existing investors New Enterprise Associates (NEA), Core Innovation Capital, 8VC, and Morpheus Ventures. This closing brings Bestow’s total financing to more than $18 million, the company said. O’Banion says the company will use the money to aggressively expand nationally in the next year.
“I like to find a very large and staid industry and bring innovation and technological disruption to that industry,” he says.
O’Banion is a serial entrepreneur who has founded two companies related to the insurance market: one in title insurance and another working with companies that have self-insured health plans for employees. “That got me to exploring the life insurance industry,” he says. “I started meeting with carriers and insurers and executives a few years ago.”
His latest company, Bestow, focuses on connecting individuals to term life insurance policies. So far, Bestow is able to offer policies in Texas and Utah.
O’Banion says Bestow has developed a proprietary underwriting engine that uses predictive analytics to assess an individual’s risk factor to determine which insurance policy that person qualifies for and how much it would cost—without the need for the outside medical exam typically required for such policies.
“We looked at how somebody goes through a life insurance application, and then thought about how to use big data and predictive analytics and to make the process easier,” he says.
Bestow is among a handful of companies seeking to use new technologies to revamp the insurance industry. The Zebra, which was founded in Austin in 2012, focuses on the car insurance market, for example.
O’Banion says Bestow streamlines the questionnaire process insurers use to determine a person’s eligibility. “We have a process we call ‘dynamic underwriting,’” he says. “It allows people to answer much fewer questions and, on the back end, to [have that information] be directly integrated with a number of data providers. We are authenticating your ID, pulling medical data, your prescription information, financial score.”
Bestow is working with the Munich American Reassurance Company, the U.S. division of Munich Re, and North American Company for Life and Health Insurance. The startup works as an agent and a third-party administrator through which it earns commissions and fees from servicing any policies it brokers. O’Banion says Bestow has about 8,000 customers enrolled so far.
“The applicant has the ability to see the data that we’re pulling on them,” O’Banion says. “We’re very upfront about what data we’re looking to get on them.”
