Raincoat raises $4.5M to create new insurance for natural disasters
Puerto Rican startup Raincoat announced it has raised a $4.5 million seed round, led by insurance technology investor Anthemis and investment group SoftBank. The startup also had the backing of the Chilean financial group Consorcio, Miami-based 305 Ventures, New York-based Divergent Capital, and Banco Popular de Puerto Rico.
The company was born in response to the aftermath of Hurricane María in 2017, which left millions of Puerto Ricans without electricity or water service for months and seriously affected thousands of homes and businesses.
Building upon the concept of parametric insurance — with its ultra-streamlined policy design and payout mechanisms — Raincoat’s climate insurance solutions aim to provide financial institutions, governments, and insurers automated, end-to-end products for protecting individuals and small businesses affected by natural disasters like hurricanes, earthquakes, and floods.
With its experienced team of scientists, engineers and insurance experts, Raincoat develops the infrastructure and capabilities needed to deliver a scalable and automated climate insurance solution that companies, and public entities can offer to those who need to be covered and protected in the face of a natural disaster.
Jonathan González, one of the founders and current leader of the company, experienced the effects of the hurricane first-hand and this inspired him to found Raincoat with the purpose of reducing the economic impact of these events in all parts of the world.
Heralded as a potential solution to the inherent inefficiencies of traditional insurance policies, parametric insurance insures a policyholder against the occurrence of a specific event given fixed and transparent parameters, such as the magnitude of the event instead of the magnitude of losses incurred.
“While fully-automated insurance holds the key to insuring the most vulnerable against ever-more frequent climate disasters, the obstacles to fully implement these programs at scale are incredibly complex,” said González.
“Our team hands off an end to end, fully operational, tailor-made solution that can be embedded in our partner’s existing channels, facilitating their claim response to end users,” he said.
“We gather all industry and local regulations, capacity, science, data and software development to deliver an automated parametric insurance product that covers all the stages of a policy lifecycle,” said González.
Partnering, for example, with financial institutions and insurers to help attach climate insurance coverage to traditional products, or with governments seeking to eliminate inefficiencies in the payout process for citizens in the aftermath of climate disasters, Raincoat’s full stack approach sets it apart in the burgeoning parametric space.
Their products aim to enable scalable end-to-end parametric climate disaster insurance programs, helping promote global climate adaptation and eliminating a persistent global coverage gap.
It started with local support
Before raising its most recent investment round, the company’s proposal received the support of several local business programs.
“Our path as entrepreneurs has had the constant support of the local ecosystem, who were among the first to believe in our company. This allowed us to iterate on the solution and generate the alliances that are key to our growth today,” said González.
One of the groups to support was Grupo Guayacán.
“Raincoat is a living example of the resilience and creativity of Puerto Rican entrepreneurs. It has been a privilege to support Jonathan and the team in their growth, and we are very excited to see how the company has evolved despite the challenges. We’re very proud to celebrate this milestone and we are fortunate to continue supporting them” said Grupo Guayacán’s Executive Director Laura Cantero.
Accelerator Parallel18 was also part of Raincoat’s initial steps.
“We believe in the global potential of Johnathan González’s project, since he was part of the eighth generation of Parallel18,” said Lucy Crespo, CEO of the Puerto Rico Science, Technology and Research Trust, which operates the Parallel18 program.
“We’re pleased to have been part of the development of this new company with an innovative solution in the field of insurance, which has led them to obtain this first round of financing from large local and international investors,” she said.
Currently, Raincoat is working with international reinsurers and governments worldwide to protect farmers and individuals from catastrophic weather conditions that affect their businesses.
Likewise, the startup has active corporate projects in Puerto Rico, Jamaica, Mexico, and Colombia. With this funding round, Raincoat seeks to expand its services worldwide, providing a solution for the over 3 billion people and 120 million businesses at risk of being affected by natural disasters.