Beam Raises $80M to Fuel Dental Insurance Growth

Beam Secures $80 Million in Series E Funding

This morning, Beam, a company specializing in dental insurance for corporate workforces, announced the successful completion of an $80 million Series E funding round. Traverse, which is affiliated with Mercato, spearheaded the investment. Nationwide insurance also participated as a new investor in this round.

Existing investors, including Drive Capital and Georgian Partners, contributed additional capital to this funding event.

Rapid Growth Fuels Investment

This investment follows a period of substantial growth for Beam, a trend frequently observed among newer insurance providers. These companies often utilize digital data collection to gain deeper insights into consumer behaviors.

This information empowers firms like Beam, and those in the auto insurance sector, to incentivize cost-reducing actions – such as consistent brushing or safe driving – and refine their risk assessment processes.

Data-Driven Underwriting Enables Scaling

Once these innovative insurers accumulate sufficient data to validate their underwriting models, they can achieve rapid business expansion, a characteristic highly valued by investors.

Attractive Market Segment

Beam CEO Alex Frommeyer highlighted the appeal of the dental insurance market in a recent interview. Unlike property insurance, which can be impacted by large, catastrophic events like house fires, dental insurance generally avoids such extreme claims.

Frommeyer stated that his company maintains loss ratios “below 70%,” indicating that less than $0.70 of every premium dollar is spent on claim payouts.

Strong Financial Performance

While specific details regarding combined loss ratios and loss adjustment expenses are unavailable, the reported loss ratio suggests a healthy margin within Beam’s core insurance offering. This level of performance is noteworthy, as some well-regarded neo-insurance companies are striving to achieve similar results.

Combined with Beam’s reported 600% revenue growth over the past three years and a “net revenue retention rate of 100%,” it becomes clear why investors were eager to provide further funding.

Beyond Insurance: Hardware and Software

Beam’s business model extends beyond traditional insurance services. The company also manufactures its own toothbrush to monitor the brushing habits of its members and encourage consistent, effective oral hygiene through promotional incentives.

Furthermore, Beam’s software platform for enrollment, claims processing, and related functions has gained traction, leading the company to offer other insurance products to customers through its platform, alongside its core dental coverage.

Funding Allocated to Growth

Frommeyer explained that the relatively low risk of mega-claims in dental insurance translates to lower capital reserve requirements compared to other insurance types. Consequently, the new funding will be primarily allocated to fuel further growth.

This influx of capital is particularly welcome as the company aims to replicate its past growth, having doubled its member base in both 2019 and 2020.

Insurtech Market Dynamics

The insurtech market has experienced mixed results for public investors. While companies like Lemonade have shown positive post-IPO performance, others, such as Root, have faced challenges. Root’s stock price has declined recently, and MetroMile, which went public via a SPAC, has also experienced recent trading losses.

Significant Market Opportunity

Despite these fluctuations, the overall insurance market remains substantial. Startups leveraging technology and modern digital software to innovate within this market continue to attract investor interest.

It will be interesting to observe how Beam utilizes its latest funding to further its progress and capitalize on the opportunities within the insurtech landscape.