Here in the United States, the concept of using a driver’s data to determine the cost of auto insurance premiums is not new.
But in markets like Brazil, the idea is still considered relatively new. A new startup called Justos says it will be the first Brazilian insurer to use driver data to reward those who drive safely by offering “fairer” prices.
And now Justos has raised around $ 2.8 million in a funding round led by Kaszek, one of Latin America’s largest and most active venture capital firms. Big Bets also participated in the round, along with the CEOs of seven unicorns, including Assaf Wand, CEO and co-founder of Hippo Insurance; David Vélez, founder and CEO of Nubank; Carlos Garcia, founder and CEO of Kavak; Sergio Furio, founder and CEO of Creditas; Patrick Sigrist, founder of iFood and Fritz Lanman, CEO of ClassPass. (There is a seventh CEO who wishes to remain anonymous). Senior executives from Robinhood, Stripe, Wise, Carta and Capital One also put money into the trick.
Serial entrepreneurs Dhaval Chadha, Jorge Soto Moreno and Antonio Molins co-founded Justos, having recently worked at various Silicon Valley companies including ClassPass, Netflix, and Airbnb.
“Although we have been friends for a while it was a coincidence that the three of us were thinking about building something new in Latin America “, said Chadha. “We spent two months studying possible avenues, talking with people and investors in the United States, Brazil and Mexico, up to we had the idea of creating an insurance company capable of modernizing the sector, starting with auto insurance.
Ultimately, the trio decided that the auto insurance market would be an ideal sector given that in Brazil it is estimated that over 70% of cars are uninsured.
The process of getting insurance in the country, anyway, is slow. It takes up to 72 hours to receive the initial coverage and two weeks to receive the final insurance policy. Insurers are also taking their time to resolve claims related to damage and loss of cars from accidents, contractors say. They also claim that the prices are often not fair or transparent.
Justos aims to improve the whole process of auto insurance in Brazil by measuring how people drive to help price their Insurance conditions. Similar to Root here in the US, Justos intends to collect user data via their mobile phones so that it can “assess different types of risk more accurately and with more confidence”. In this way, the startup claims to be able to offer plans up to 30% cheaper than traditional plans and give discounts every month, depending on the driving habits of the previous month of each customer.
“We measure the safety of people behind the wheel using the sensors on their mobile phones,” said Chadha. “This allows us to offer cheaper insurance to users who drive well, reducing the biases inherent in the pricing models used by traditional insurance companies. “
Justos also plans to use artificial intelligence and computer vision to analyze and process complaints faster and machine learning for image analysis and for creating robots that help speed up claims processing.
“We are building a design-driven customer and mobile experience that aims to revolutionize insurance in Brazil, similar to what Nubank has done with the bank,” Chadha told TechCrunch. “We will eliminate all the hidden charges, much of the small text and insurance specific jargon that is very confusing to customers.”
Justos will offer its product directly to its customers as well as through distribution channels like banks and brokers.
“By going directly to the consumer, we are able to acquire cheaper users than our competitors and return the savings to our users in the form of cheaper prices,” said Chadha.
Customers will be able to purchase insurance through Justos’ app, website or even WhatsApp. For now, the company is only adding potential clients to a waiting list, but plans to start selling policies later this year.
During the pandemic, Brazil’s auto insurance industry shrank by 1%, according to Chadha, who believes this indicates “there is latent demand ready to go once things open up again.
Justos also has a good social component. Justos intends to cap its profits and donate the remaining revenues to nonprofits.
The company also has an ambitious goal: to help make insurance accessible to everyone in the world and safer roads in general.
“People will face everyday risks with a greater sense of security and adventure. Road accidents will decrease dramatically with incentives for safer driving, and the streets will be safer, ”said Chadha. “People, rather than profits, will become the focus of the insurance industry.
Justos plans to use his new capital to set up operations, such as partnerships with reinsurers and an insurance company for fronting, since he starts as an MGA (managing general agent).
It is also working on the creation of its products such as applications, its back-end and its internal operational tools, as well as the design of all its underwriting, claims and funding processes. The Justos data science team is also developing its own pricing model.
The start-up will focus on Brazil, with plans to eventually expand to Latin America, then to Iberia and Asia.
Andy Young of Kaszek said his company was impressed with the team’s experience and passion for what they are building.
“It’s a huge space, ripe for innovation and it’s the type of team that can take it to the next level,” Young told TechCrunch. “The team has has taken an approach to create an insurance platform that combines being consumer-centric and data-driven to produce something that is not only cheaper and rewards safety, but as the brand implies in Portuguese , is fairer. “