Brazilian insurtech Justos closed a $5.9M venture round led by an anonymous major reinsurer. MSR Capital also participated.
The startup will use the money to extend its runway up to 30 months and continue its growth strategy to raise a strong series B and avoid a down-round.
Justos uses machine learning models to offer better-priced car insurance, with custom premiums for each driver. Plus, the company offers drivers a discount on their monthly payments depending on their driving habits.
Justos says that its differential is to offer auto insurance with more driver-friendly pricing.
The startup uses machine learning to create models that can predict claims and, as a result, charges an individualized value for each driver.
The startup sells its insurance on a monthly payment basis. According to how the driver drove during the month, he can get a discount on the next monthly payment.
Since it began operations in January 2022, Justos has gained “thousands of customers” and its claims ratio is slightly above the average of the top 10 incumbents, partly because the startup’s premium is more competitive, partly “because we’re still learning,” Dhaval Chadha the founder said.
In addition, assertive pricing depends on machine learning modeling, which needs to be trained with real claims. “Since we have had few claims for now, it takes time for us to train the models well,” said the founder.
He admits that Justos is running lower growth than anticipated when it made Series A – not least because expectations were high to justify the valuation at the time. “We’re at lower growth but much healthier than we had projected, and on a pretty comfortable runway,” he said.
Last August, Justos also obtained an insurer license within Susep’s sandbox. For now, however, it continues to operate in the Managing General Agent model (or MGA, in which a partner insurer provides the balance sheet) for much of its portfolio. According to Dhaval, less than 10% of the insurance issued by Justos is being done with its own balance sheet.
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