We raised Series A!
We’re excited to announce that we raised $17M to build a new category of insurance around high-frequency, low-severity (HFLS) risk. Seel’s proprietary technology turns data into risk models, and can underwrite a wide variety of “everyday inconveniences”, ranging from online order returns to package delivery dates to work interruptions. We’re lucky to work with over 200 customers who use Seel to remove friction and manage risks in their user flows.
HFLS as a new category of insurance
Throughout history, new types of insurance have evolved as new risks and technologies emerged. The $700B auto insurance industry was born after Model T created the mass market for automobile in 1907; and the $2.9T life insurance industry was unlocked after Edmund Halley's mortality table made underwriting human life expectancy possible.
The most exciting trend of our generation has been the digitization of consumers' everyday activities. Shopping, working and playing online introduced both new risks (i.e E-commerce returns) and new technologies (neural nets and big data). For the first time, consumers' everyday activities can be understood real-time, making it possible to underwrite everyday inconveniences for them. Protection against everyday inconveniences, or high-frequency, low-severity (HFLS) risks, is becoming a new category of insurance.
Seel is the leading HFLS platform
HFLS is not compatible with the ways that insurance is produced and distributed today. On the production side, actuarial tables expect tabular datasets and miss out on unstructured information (i.e images, text, time series), which are often required to underwrite subtle HFLS risks. On the distribution side, agents and ads are costly acquisition channels that are too expensive for HFLS products, which have lower price points that typical insurance products.
So to make HFLS viable, we used technology to create a new playbook. On the production side, we built an underwriting engine around neural nets to capture unstructured data. On the distribution side, we built a suite of API that embeds our products into organic user journeys. This neural net + API based technology platform is unlocking HFLS at scale.
From E-commerce returns to everyday inconveniences
Seel’s first commercial application is in underwriting E-commerce returns. Our underwriting engine analyzes hundreds of signals during an online shopping session, and predicts the probability of return as soon as an order is placed. This superpower of knowing which orders would be returned/refunded before they happen gives online marketplaces and independent brands new ways to operate their businesses.
One popular use case is that merchants can integrate with Seel to give their shoppers the option to return final sale items (i.e ones that merchants don’t offer or accept returns on, often seen in discounted, custom, engraved, exchange-only, store credit-only or accessory items). By paying a small opt-in fee at checkout, shoppers can make their final sale orders returnable. Return Assurance gives shoppers peace of mind and is super popular at an attach rate of over 20%. This peace of mind translates into a 5% conversion lift for merchants, as well as lower complaint rate, stronger customer loyalty and higher NPS.
Another use case is adding Return Assurance to lock in net sale on returnable orders. Merchants can pay a variable Return Assurance fee when an order is sold, and instantly lock in the Net Revenue. Shoppers who return the orders later will be refunded by Seel instead of the merchant, streamlining a significant amount of revenue operations.
The U.S. E-commerce is on track to its first $1T year in 2022, but Seel is much more than underwriting returns. Unlike knowledge based actuarial underwriting, deep learning and data based underwriting is versatile. It doesn’t need to deeply understand the subject matter, so long as there’s a massive amount of data (as is the case for most digital consumer experiences). Through successive cross-selling and expansion into adjacent risk underwriting, our vision is to power hundreds of unique products on a single HFLS platform.
About our Series A
“The nature of risk is changing. As people continue to work, play, and socialize online, they encounter new risks as well as new ways of measuring that risk. Seel is breaking new ground by building the ability to track and analyze these behaviors in real time using neural networks making it possible to underwrite everyday inconveniences.”
Lightspeed Venture Partners, the first institutional investor in Affirm, led our $17M round with participation from existing investors Afore Capital, Foundation Capital and West Loop Ventures. They are joined by a group of seasoned fintech operators. See the full press coverage on Techcrunch.
