Federato announces $80 million raised to bring RiskOps to insurance

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New capital will drive continued global expansion to bring more insurers into the AI era

SAN FRANCISCO, Nov. 20, 2024 /PRNewswire/ -- Federato, the AI-native underwriting platform for insurance, announced today that it has raised a total of $80 million, including its latest Series C funding round. The $40 million round was led by global private markets investor StepStone Group (NASDAQ: STEP), with participation from existing investors, including Emergence Capital, Caffeinated Capital and Pear VC, who together represent over $200 billion in combined assets under management.

Federato’s industry-first RiskOps platform for Property & Casualty and Specialty insurance aligns portfolio strategy with underwriting action. (PRNewsfoto/Federato)
Federato’s industry-first RiskOps platform for Property & Casualty and Specialty insurance aligns portfolio strategy with underwriting action. (PRNewsfoto/Federato)

"We have been closely following Federato's rapid growth over the past five years as an LP in several organizations who have been investors in the company since inception. Founders Will and William's deep expertise in AI and their dedication to bringing a true vertical AI product to the insurance industry is impressive. Federato's fast-growing customer base is a testament to the impact they've already delivered," said John Avirett, Partner at StepStone Group. "We are excited to partner with Federato as they help insurers innovate on business models to better serve challenged markets."

Federato's RiskOps platform opens the door to a new era of underwriting for the industry. Insurers have confronted new challenges like climate change, cyber crime, and social inflation over the last decade, and AI is likely to define the winners and losers in the decade to come. RiskOps is about enabling an AI-first mindset that makes risk selection faster and more precise, teams more efficient, and growth more profitable and sustainable. Federato customers regularly see a 90% improvement in time-to-quote, 3x improvement in the proportion of good business bound, and 50-90% reduction in systems used by underwriters. These improvements across the value chain are fundamental to confronting these new challenges while staying efficient and competitive.

"When we started with Federato nearly three years ago, we were impressed by the modern underwriting platform they had built. Since then, Federato has become the core engine that powers our growth businesses here in North America. Today, we are leveraging the RiskOps platform as a unified core system for the entire policy lifecycle, from submission to quote, bind, and issue." said Mike Foley, Chief Underwriting Officer, QBE North America.

As losses have grown more volatile and less predictable for the insurance industry, the volume of data insurers need to manage has grown faster than it can be organized and used. The combination of these forces has led many large players to pull back from challenged markets, citing a technical inability to effectively price risk. Federato's AI-native RiskOps approach has been particularly impactful in helping insurers confront difficult markets like aviation, commercial trucking, political violence, wildfire, and hurricane while delivering strong baseline efficiencies to more traditional markets.

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