Blueprint Title, an insurtech startup that specializes in title insurance, today announced it had closed a $16 Million Series B. Fort Ventures led the new round. Fort Ventures led the new round. The startup had previously raised $8.5 million in Series A during the last weeks of 2019.
Blueprint, an insurtech startup, fits in the neoinsurance group that we have been following in recent quarters. However, it is still a distinct company. Blueprint is not like the Roots, MetroMiles, and Hippos that were launched via traditional IPOs. It primarily sells to businesses and offers a different product.
In the past year and a quarter, neoinsurance firms went public. These companies sell to consumers. Blueprint sells to professionals looking for better title insurance. Blueprint CEO Steve Berneman explained to TechCrunch that this does not mean its customers are homeowners looking for coverage for their main residence.
This means that the company's go-to market activities are different from those of its peers in the consumer-focused cohort, and that it has a very different loss profile.
Berneman stated that title insurance has a claim rate of around 1% to 4.4%, which is far less than auto insurance. This means that title insurance has a different risk profile and pricing. Title insurance underwriting is more difficult, which makes it more expensive and less flexible.
The CEO stated that the current US title insurance market is comprised of four companies representing around 90% of the market. Due to the rules that require public pricing in many states there is alignment on pricing by some of the leading players. Berneman believes that the $18 million market for title insurance should be considered a $10 billion market due to market concentration and price harmonization.
Blueprint's call was the first time a startup had discussed shrinking its market.
The point is clear: if title insurance is priced incorrectly and Blueprint sells to corporate clients, it may be able to offer profitable coverage at a lower price point than the market and grow rapidly. The startup stated in a press release that it expects to see 400% growth in revenue in 2021 compared to 2020.
This growth rate is what explains Nashville's latest round, and what we assume was a sharp upsizing of its valuation.
Blueprint announced that it had purchased Southwest Land Title Insurance Company as an underwriting business in its funding round announcement. Berneman stated that in order to reduce the market for title insurance through lower pricing, his company must be fully-stack. This means that it can both write its own coverage and sell it. If it did not, its margins could leak.
Blueprint, which is similar to Next Insurance, is a startup that believes selling insurance to businesses will be lucrative. It will be fascinating to see this B2B group grow, especially considering that Wall Street has changed its mind about the value of consumer-focused neoinsurance companies.
