Understory, a Wisconsin-based provider of insurance solutions built for the era of climate change, has raised a $15 mn round of Series A capital co-led by True Ventures and Prelude Ventures.
Insurtech Understory has seen 500% year-over-year growth over the past year. And now it is going in a new direction, launching a product focused on the renewable energy sector.
Understory would deploy the weather stations, dubbed Dot, across the globe, gathering more and more data. It also raised around $40 mn in funding, including an initial $1.9 mn round led by True Ventures in 2014.
Understory began providing insurance offerings that adapt to meet the growing threat of severe weather risk, often called parametric insurance.
Understory introduced a Dealers Open Lot insurance solution to manage risks for U.S. auto dealers. This solution now protects inventories at nearly 1,000 locations nationwide.
Early notifications to dealerships have saved customers hundreds of millions in damage. One client reduced hail damage from $110 mn to $50 mn with timely alerts.
With extensive data, the company developed global catastrophe models to better assess risk to individual properties. Reinsurance partners validated these models and suggested selling the historical data as a software-as-a-service or data services product.
In 2014, Understory co-founder and CEO Alex Kubicek aimed to deploy a network of ground-level weather stations to track real-time weather and anticipate needs, such as resource allocation during storms.
Kubicek partnered with Bryan Dow to create weather stations, hoping to extend thunderstorm or tornado warnings by 10 to 15 minutes. They discovered that much of the weather forecasting data dated back to the 1980s.
We needed a much better weather dataset, and that’s when I connected with Bryan Dow to build the weather station
Alex Kubicek, Understory co-founder and CEO
“It is a solid-state measurement that measures wind, rain and hail at 125,000 times a second, as well as measuring temperature, pressure and humidity. That gives us a really deep, detailed understanding of what’s happening on the ground.”
During that time, they had met Neil Irwin, who was a senior executive at one of the leading insurance brokers in the world, and decided to build their own insurance company.
Irwin came on as co-founder and international president to help them learn about the insurance industry and catapult Understory into this really exciting next phase.
In the audit world, we’re not just helping people with the climate-related risks, although that’s huge. We’ve been able to avoid 10 major incidents and about $3 mn of actual losses that would have occurred
Neil Irwin, Chief Economic Correspondent – Axios
Kubicek stated that their proprietary risk mitigation technology allows solar farms to reduce hail repair costs by 50% through bulk purchasing power. Some models predict weather events 45 min in advance, giving operators time to adjust the panels’ angles to deflect hail.
This strategy can reduce a $10 mn loss to $5 mn or a $2.5 mn loss to $500K.
The current solar industry is actually in a crisis right now. “A lot of these contracts are being canceled because the only place that you’re trying to build these large solar projects are in areas where the sky is literally trying to kill you. With our technology, we’re able to mitigate that risk,” Kubicek said.
Understory’s global network of Dot weather stations powers the world’s most sophisticated weather risk model.
By combining mutualized, optimized risk structures with precision weather technology and modeling, Understory enables affordable, stable property insurance solutions.
Natural catastrophes, driven by the volatility of climate change, are increasing rates and restricting insurance coverage. Traditional insurance is no longer fully effective. Insurance and reinsurance companies are pulling out and leaving 76% of global assets unprotected. Transformation is inevitable, and it’s coming to the worldwide property insurance market. Understory cracked the code, and our approach is the way to close this gap.
With a fiercely dedicated and passionate team of both remote and Madison, Wisconsin-headquartered team members, Understory’s culture values the unwavering support of colleagues, resilience, adaptability, work-life harmony, time for nurturing families, and fostering communities that care about the well-being of people and their livelihoods.
by Peter Sonner